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FAQ's

Frequently Asked Questions

Q: How can I purchase Massachusetts General Obligation Bonds?

A: You may only purchase Massachusetts bonds through a registered broker/dealer. Bonds that have already been issued are often avaialble in the secondary market. Bonds that are being newly issued may be purchased through any member of the Commonwealth's "Financing Team." Information on the Financing Team may be found on the link on the right side of this webpage.

Q: What are municipal bonds?

A: Municipal bonds are debt securities issued by states, municipalities and other authorized agencies. They are sold to raise money for public purposes such as schools, highways, government buildings, hospitals, etc. In Massachusetts, a five year capital improvement plan is updated annually to fund both ongoing and future projects. Current projects include a program to upgrade bridges throughout the state, an investment in affordable housing programs, and a plan to upgrade public transportation throughout the commonwealth.

Q: What are the benefits of purchasing municipal bonds?

A: Municipal bonds offer a return on your investment. Most municipal bonds have a predictable, fixed stream of principal and interest payments. In addition, depending on the specific bond issue, interest is usually exempt from federal personal income taxes. In some states, including Massachusetts, municipal bonds that are issued in your state of residence are also exempt from that state’s personal income tax. For example, a Massachusetts resident would not pay Massachusetts state income tax or federal income tax on interest received from tax-exempt Commonwealth of Massachusetts General Obligation bonds.

Q: Are there different types of municipal bonds?

A: Municipal bonds are characterized by the revenues which will provide principal and interest payments. There are basically two types of municipal bonds: revenue and general obligation.

Revenue bonds are backed by the specific revenue stream of the project being financed. For example bonds issued by a highway authority to build a toll bridge will be paid for by the tolls collected when cars or trucks drive over the bridge. Other types of revenue issuers include sewer systems, hospitals and public power generation systems.

General obligation bonds are backed by the taxing power of the issuer. For example, if a state issues general obligation debt, the taxing power of that state backs the bonds (taxes include personal and corporate income taxes as well as sales taxes). If a state encounters financial difficulty, it has the ability to raise taxes in order to pay bondholders.

Q. How can I invest in municipal bonds?

A: As an investor, you can purchase bonds through a primary market sale or a “new issue.” In a new issue, terms of the bonds are set, including price, coupon rate and maturity date and the bonds are sold by a group of investment banks referred to as a “syndicate.” A larger group of banks that also have access to the bonds but are not formal members of the syndicate is known as a “selling group.” A retail investor who would like to participate in a primary bond issue needs an account with one of the brokerage firms serving in the syndicate or selling group in order to purchase the bonds.

Bonds may also be purchased in the secondary market. Other investors may already own bonds that they want to sell or brokerage firms may own bonds that have already gone through the primary offering process that they are willing to sell to clients. Call your brokerage firm representative for specific investment information.

Q: Are there any fees when investing in municipal bonds?

A: When bonds are purchased in the primary market, the entity issuing the bonds pays a sales credit to the firm that sold the bonds. Because of this, the investor generally does not pay a commission to the broker. When purchasing bonds in the secondary market, buyers generally pay fees directly to the broker for facilitating the purchase. Specifics are are based on the fee arrangement the investor has with the broker.

Q: Are municipal bonds safe?

A: Historically, municipal bonds have one of the strongest records of safety relative to other types of bonds. No states have defaulted on their general obligation debt since the Civil War. Key issues to review regarding safety include the economic characteristics of the state or municipality, the revenues backing payment on the bonds, and management practices of the issuer.

Many municipal bonds are reviewed and rated by independent credit rating agencies. These agencies will assign a rating based on analysis of the issuer’s ability to pay principal and interest on a timely basis. Bond ratings range from the highest quality of AAA to a defaulted security, which is rated D. Issuers with bond ratings of BBB or higher are characterized as “investment grade” quality.

Q: What does it mean if a bond is callable?

A: Most municipal bonds are issued with an early redemption feature, typically referred to as a call option. A call feature gives the issuer of the bond the right, but not the obligation, to “call” back or redeem bonds after a specific amount of time has passed from the time of issuance. If a bond is called early, principal is repaid back to the investor and regular interest payments cease.

Q: What is a pre-refunded bond?

A: In low interest rate environments, bond issuers may issue new bonds to fund the redemption of other outstanding bonds of that issuer. In some cases, the issuer decides to exercise its call option prior to the actual call date. This is knows as an “advance refunding.” The proceeds from the new bond issue will be used to buy collateral (typically US Treasury securities) to hold in an escrow account that will “pre-fund” principal and interest of the outstanding callable bonds until they reach their call date and are redeemed. These bonds are now referred to as pre-refunded bonds and are secured by the collateral held in the escrow account. At the time of the call date, principal on the bonds will be repaid and regular interest payments will cease.

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Disclaimer

You must read the following information before using this website. Under no circumstances shall the information on this website constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. Offers to purchase securities may be made only through a registered broker-dealer and through an Official Statement.

The information contained on this website has been included for general informational purposes only. The information set forth is limited in scope and does not contain all material information concerning the Commonwealth's bonds or notes or the Commonwealth necessary to make an informed investment decision. No person should make an investment decision in reliance on the information contained herein. Each document contained on this website speaks only as of its date. Readers are cautioned not to assume that any information has been updated beyond such date unless a document expressly states that it constitutes an update of a specific portion of a document. Past results do not necessarily forecast future results. Certain financial information and operating data, as well as information regarding certain material developments with respect to the Commonwealth and its securities, may be filed with the Municipal Securities Rulemaking Board Electronic Municipal Market Access (EMMA).

This website contains certain forward-looking statements that are subject to a variety of risks and uncertainties that could cause actual results to differ from the projected results, including without limitation general economic and business conditions, conditions in the financial markets, the financial condition of the Commonwealth and various state agencies and authorities, receipt of federal grants, litigation, arbitration, force majeure events and various other factors that are beyond the control of the Commonwealth and its various agencies and authorities. Because of the inability to predict all factors that may affect future decisions, actions, events or financial circumstances, including, in particular, current adverse global financial market and economic conditions, what actually happens may be different from what is set forth in such forward-looking statements. Forward-looking statements are indicated by use of such words as “may,” “will,” “should,” “intends,” “expects,” “believes,” “anticipates,” “estimates” and others.

Bonds may not be sold, nor may an offer to buy be accepted, prior to the time an Official Statement is delivered in final form. A definitive Official Statement with respect to any bonds will be made available concurrently with their sale. A Preliminary Official Statement for any bonds may be obtained on this website and from the firms listed on the cover of the Preliminary Official Statement.

Any Preliminary Official Statement relating to bonds or notes included on the Consolidated Bond Sale Calendar page is provided only as a matter of convenience. For investment advice on bonds, please contact your investment advisor. No statement found on this website is incorporated by reference in any Official Statement for the bonds and no statement on this website is part of any Official Statement. By choosing to continue and view the information on this website you are acknowledging that you have read and understood and accept the terms of this Disclaimer.

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The State Treasurer's Office does not endorse and makes no representations or warranties as to any of the content, information, products, services or opinions contained on EMMA. The State Treasurer's Office bears no responsibility and shall have no liability for the content of any external websites and the accuracy, completeness, finality, timeliness or relevance of any information on any of the external websites. While EMMA purports to provide real time trading activity, the State Treasurer's Office cannot ensure the accuracy and timeliness of such information. It is the responsibility of the viewer to evaluate the content and usefulness of information obtained from other websites.

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LEGAL DISCLAIMER

THIS WEBSITE DOES NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO SELL OR BUY ANY SECURITIES. OFFERS TO PURCHASE THE BONDS OR NOTES MAY ONLY BE MADE THROUGH A REGISTERED BROKER-DEALER AND THROUGH AN OFFICIAL STATEMENT.

This website is designed to provide the viewer with general information only and no person should make any investment decision in reliance upon the information contained herein.

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The information contained on this website has been included for general informational purposes only and is provided without warranty of any kind and, in particular, no representation or warranty, express or implied, is made or is to be inferred as to the accuracy, reliability, timeliness or completeness of any such information. The information presented on this website speaks only as of the date the information was prepared and has not been updated since that date and as a result, may not address all factors which may be material to an investor and may contain omissions of fact or statements that are not accurate because of the passage of time or changes in facts or circumstance subsequent to the date of such information. Consequently, no person should make any investment decision in reliance upon the information contained on this website.

Use of External Links

By clicking on any of the external links, you will leave the BUY MASSACHUSETTS BONDS website managed by the Massachusetts State Treasurer’s Office and enter external websites via external links contained on this website.

The viewer acknowledges that the content of these external websites have not been prepared or developed and are not maintained by or under the control of the State Treasurer’s Office. These external websites have not been checked for accuracy, or otherwise reviewed by the State Treasurer’s Office and in some cases may not have been viewed by the State Treasurer’s Office.

The State Treasurer’s Office is not responsible for and shall have no liability for the content of any external websites, including the linked websites for brokers selling Massachusetts General Obligation Bonds.

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The State Treasurer’s Office does not endorse and makes no representations or warranties as to the accuracy, completeness, finality, timeliness or relevance of any information on any of the external websites.

By choosing to continue and view the information contained on this website, you are acknowledging that have read and understand this Disclaimer.

You must read THIS DISCLAIMER before using this website. Information on this website has been included for general informational purposes only. The information set forth is limited in scope and does not contain all material information concerning the Commonwealth's bonds or notes or the Commonwealth necessary to make an informed investment decision, nor does anything contained on this website constitute an offer to sell securities or the solicitation of an offer to buy securities. No person should make an investment decision in reliance on the information contained herein. Information, including any documents, contained on this website speaks only as of its date. Certain information on this website updates specific portions of Commonwealth documents; readers should not assume any other portion of such document has been updated unless expressly provided. Past results do not necessarily forecast future results. Certain financial information and operating data, as well as information regarding certain material developments with respect to the Commonwealth and its securities, may be filed with the Municipal Securities Rulemaking Board Electronic Municipal Market Access (EMMA).